Do You Need an Auto Extended Warranty

An important factor to consider for an extended warranty purchase is the reliability of your car. Many top rated cars can go 5 or 6 years without major repairs. Quality has improved over the years. Back in the early 90's, most domestic new cars only had 1 year/12K mile factory warranties. Imports then started having factory warranties for 3 years/36K miles. Then the big 3 were forced to follow. One thing to keep in mind regarding extended warranties is that a 5yr/50K mile extended warranty typically would only cover a car with a 3yr/36K-mile factory warranty for an additional 2yr and 14K miles. Like factory warranties, extended warranties usually start at the new-car purchase date.

So if you have a reliable car, it may not pay to have an extended warranty. To determine your car's reliability, you can check with the reliability ratings at Consumer Reports. In its spring auto guide, it includes ratings for predicted reliability. It's a forecast of how well a new car will likely hold up based on the model's recent history. The data is based on Consumer Report survey responses from their subscribers. The reliability scores are divided into 5 categories from best to worst.

Some examples of cars with top reliability ratings include the ones you would typically expect such as Toyota Prius, Toyota Corolla LE, Honda Civic EX, Toyota Camry LE, and the Lexus LS430. There were a few surprises in the top reliability ratings such as the Pontiac Grand Prix GT V6. The Chevrolet Impala LS V6 scored didn't get a top score but had a respectable second best score, likewise for the Hyundai Elantra GT and the Nissan Maxima 3.5 SE V6.

Then there were those that scored in the middle that I expected would have been either the first and second best. These include the Volkswagen Passat GLS and the Nissan Altima 3.5 SE V6. The other midpackers were more of what I expected such as the Dodge Neon SXT, the Ford Taurus SEL V6, and the Hyundai Accent GL.

And finally, there were many with the lowest two scores. For these, it's probably a good idea to get an extended warranty. I was surprised to see many BMW models with these low scores. They included the BMW 530i and the BMW 745li luxury sedans, and the BMW X5 3.0i mid-sized SUV. Also, I was surprised to see the Saturn Ion, the Saab 9-3 Aero and the Nissan Sentra 1.8s near the bottom. Then there were the models that didn't surprise me. These included the Chevrolet Trailblazer EXT LT, GMC Envoy SLE, Pontiac Bonneville SE, the Cadilac SRX V8, and the Chevrolet Malibu.

Another good source of car reliability information is J.D. Power Consumer Center for Autos. I did a little comparison of J.D. Powers with Consumer Reports using BMWs. There was some correlation with the 2003 BMW 7 Series. J.D. Powers had a score below average on overall quality. However, the other models scored okay. It had an average quality score for the BMW 5 Series, and an above average score for the X5 series.